Too Good to Be True

In a press release early last year, World Transport reported "positive progress on corporate structure." The previous year, "The company had gone through some legal problems resulting from the arrest of its founder in March of 2003 for alleged fraud," said the news release. The company had removed its president in late 2003 "because of substantial infractions and violations of board resolutions."

The founder is Douglas Norman. He also founded a bank on the Cayman Islands, an offshore tax haven. Early last year, he was wearing an electronic bracelet so the district attorney's office knew where he was. The DA's office was successfully prosecuting some San Diego rascals who had stashed funds in Norman's offshore bank. In early 2003, Norman was indicted in New York for artificially inflating World Transport's shares by sending out false news releases and postings on Internet message boards about the prospects of the Worldstar vehicle. He was imprisoned, but the New York case did not go forward, according to Steve Davis, deputy district attorney in San Diego.

World Transport has something in common with the City of San Diego: it is having trouble getting an audit completed. There are other similarities: in November, the company reported in a government filing that it is "continuing to investigate the conspiratorial and fraudulent conduct of past officers and directors in diverting company assets and funds, [and] at the same time cooperating with the [Securities and Exchange Commission] in prosecuting the founder of the company for his alleged violations of federal securities laws." "Nobody has been paid," says Roger Brown, secretary. The stock sells for less than a penny a share.

Global Health purports to be a biotech. On September 9, the Securities and Exchange Commission filed suit against Global Health, three related companies, and two telemarketers that appear to be operating from San Diego. The telemarketers, Vince Dory and Joshua Adams, were soliciting investments in a company that supposedly has a cure for cancer.

The telemarketers sent potential investors -- mainly elderly -- a letter on Food and Drug Administration stationery saying that the agency had approved the cancer treatment and Global Health could soon market it. "The FDA letters, however, are forgeries, and the claims are false," says the securities commission. Investors' money has been sent to two different mail drops in Otay Mesa and from there went right over the border and was cashed or stashed in a Tijuana bank, according to the securities commission.

It appears the alleged conspirators aren't too bright. One investor got a glowing letter on Food and Drug Administration letterhead. It predicted that Global Health's cancer treatment could rake in $1 billion in sales in a year. But it was addressed, "Dear Investor." And it was signed by Dory. Why would Food and Drug send an "A-OK" letter to a company's shareholders? And why would a letter on Food and Drug's letterhead be signed by a company's chairman? A federal judge has frozen the assets and demanded repatriation of funds from Mexico. "We have not found Dory and Adams," says Michael Piazza, the Securities and Exchange Commission attorney on the case. "One may be operating out of New York."